Sunbelt Atlanta Radio Interview: Should I Sell My Business Now or Wait Until the Pandemic Ends?

In America, Covid-19 first began to impact the business world in January 2020. By March 2020 its impact was in full swing as lockdowns began and the first economic stimulus plan was signed into law. This period, from March 2020 onward, will be heavily scrutinized when brokers try to assess the value of any business being sold today.

Despite Covid, Buyers are looking to purchase Businesses

If you are thinking about selling your business, the good news is that there are plenty of buyers. But do you know what your business is worth?

Sunbelt Atlanta’s CEO/Managing Director Doreen Morgan has lots of good advice for those who are thinking of selling a business in the wake of Covid-19 and its ongoing variants.

Anyone thinking of selling a business today must, of course, first properly determine its value. Covid-19 has certainly impacted the value of many businesses. That impact is factored into the business valuation process.

Covid-19 and its lingering variants muddy up the business valuation process. Brokers will also look now at cash flow to determine how long a business could operate under the circumstances caused by Covid-19.

And, to evaluate what a business is worth now, brokers also consider if the business to be sold got support from the CARES ACT,  The Consolidated Appropriations Act (2021), or the American Rescue Plan Act (ARPA).

Brokers will want to know if that business received economic aid from the Paycheck Protection Program (PPP), Emergency Economic Injury Grants/Economic Injury Disaster Loans (EIDL), or the Small Business Debt Relief Program.

All these elements factor in determining a company’s business value. 

If your business did receive Covid relief aid, that doesn’t necessarily hurt your company’s sale value. Don’t assume your business will bring a lower price because of Covid-19.

“It is a good time to sell if you've been able to maintain profitability through the pandemic.,” said Ms. Morgan. If your business has been able to continually generate profit or has found a way to pivot and stabilize sagging sales, that works in your favor. 

For example, if you owned a buffet-style restaurant franchise, when Covid struck your business would have certainly declined. But, if you were able to pivot during 2020-2021 and turn your restaurant into one with a thriving take-out business, selling it now might bring a good return.

If your business has been negatively impacted by Covid-19, selling today might not be a good idea. You may be disappointed in learning what it’s currently worth. But if you’re ready to sell, don’t let the fear that it will bring a lower price stop you from exploring the current worth of your company. You may be pleasantly surprised.

Want to better understand Your Opinion of value in the era of Covid 19?

Listen or read the interview transcripts below.

Ask the Experts Radio Show Interview - Audio

Ask the Experts Radio Show Interview Transcript

Announcer 1: Brought to you by "Ask the Experts." The views expressed on this program do not necessarily reflect those of this station, management, or Beasley Media Group.

Announcer 2: Welcome to "Ask the Experts" radio show with Atlanta's top experts in legal, health, financial, and home improvement. So sit back for the next 30 minutes with our experts in tax relief, family law, estate planning, plumbing repair, personal injury law, and wealth management. If you have any questions for our experts, please call in at 404-603-8770. And now, here's your host, Steve Sanger.

Steve: Good morning, Atlanta.

Doreen: Hello, Steven. How are you?

Steve: Good morning, Doreen. You know, this is what happens when you have a live show. I believe we're okay now. Are we okay now, Myles? Okay. So, I gotta tell you, I was thinking this week, because we do shows all over the country. But I gotta tell you, today's show topic is, without a doubt, my favorite now because of what is going on in the country. There's a lot of people that want to retire, possibly sell their business. There's people who have been laid off and want to start their own business, want to buy a business. And this could not be a better show to do. And we have the greatest expert from one of the greatest business brokers in the United States, Sunbelt Business Brokers. Let me introduce you to our guest, Doreen Morgan. Good morning, Doreen.

Doreen: Good morning, Steven. How are you? Wow, that was a very nice introduction. I appreciate that.

Steve: I love what you do because I know you love what you do.

Doreen: Yeah, I sure do. Sure do love it. Love it.

Steve: So, let's start off by telling people about Sunbelt.

Doreen: Okay. Well, Sunbelt Business Brokers Atlanta has been in the Atlanta market for 25 years. We only represent sell side. So we represent sellers of main street and lower middle-market companies. And that's what we've done for 20 plus years, 25 years, and love what we do, love helping business owners retire and realize their dreams, and at the same time, we are ushering in a new buyer that's entering a whole new phase of their life. So, love what we do. We are part of Sunbelt Network which has 250 offices in 10 countries. And we are based here in Atlanta and cover Georgia.

Steve: Doreen, you have the most amazing resume. Tell everybody a little bit about your background.

Doreen: Okay. Well, I have been selling businesses, I guess, since about 2002. I started in franchise development, I sold new franchise concepts for a portfolio that had five quick-serve restaurant concepts. And I met with people that wanted to go into business for themselves to determine if the quick-serve restaurant space would be a good fit for them, and then match them up with locations. We were bought out by a private equity firm, and I was moved to the sell-side team. We had 350 corporate-owned locations, and the new equity firm decided they didn't want any corporate-owned locations. So I joined the sell-side team and got down to about the last 50 and signed up for a business broker. So I think I'm kind of doing that now. And that's when I joined Sunbelt was in 2004 and sold franchise concepts for them and then started selling companies and then joined a boutique M&A firm. And from a boutique M&A firm, joined an investment bank. And then six years ago when the founding franchisee in the Atlanta market was ready to retire, I came back in and bought him out and have gone from there. That's just...

Steve: Wow. What an amazing, amazing background you've had. I read an article the other day in the "Wall Street Journal" that said that there are a lot of people out there looking to buy a business. Is that true?

Doreen: Yeah, I have never seen such a robust buyer market. And anytime there's a recession, you know, back in 2008, that really pushed buyers into the market. When people start to get laid off, they need to replace an income. And a great way to do that is to own your own business and create your own destiny. So people tend to take their 401(k) money and roll it out into a business to own their own business. And right now, interest rates are so low, they're a 50-year low, actually. That makes buying businesses more attractive as well, because you can buy more business for your money than you could six or eight years ago.

And then, in addition to, you know, people coming out of corporate America that want to own their own businesses, we have investors that traditionally invest in real estate investment trusts that are pulling their money out of those trusts to diversify more as most of those investments are in office buildings, strips, shopping centers, which are, you know, office buildings are kind of emptying out right now and they want to diversify. And then the ups and downs of the stock market, people want to buy tangible income streams and are diversifying out of stock market a little bit too. So buyer activity, just since the start of the pandemic, is up, probably 30% right now is what we're seeing. And so, you know, I think today's topic is an important one in how to buy a business because most people only buy a business once. And so, I'm really happy to talk about, you know, what you need to know to buy a business. This is a good topic, I think, for now.

Steve: I want to take this and that. I know sometimes people think that they can do this themselves. But there's so much involved in buying and selling a business that they need a company like Sunbelt, they really do. Because at the end, you know what, I had someone who wrote us after the show that he loved the show, it took him a year to sell his business. And he said, "You should tell your listeners, one thing is to be patient and not to rush it." He's probably right.

Doreen: Right, right. We, you know, have been around for a long time. We've got a very well-defined process, and typically from launch date to close date is going to be between five and seven months because we're a full service firm. So, you know, we make sure that, you know, we handle everything from start to finish. You know, we will package the business so that we line up financing. A lot of times we've found a bank that's willing to do a loan on the business before we even find the buyer. And so we're very much intermediaries, pairing people up with the right business. And we try to make it as seamless as possible. But yeah, if you're selling a business, you really don't want to go at your own. One big reason is there's no way you can sell your business on your own and keep the sale confidential. And you don't want word on the street that you're selling your company, usually that's not a great idea.

Steve: Oh, that makes sense. So, I guess the most important question is, how do you determine the price of a business?

Doreen: We pull from three different databases. So from that standpoint, on the main street business and some lower middle-market businesses as well. We pull from three different databases. One sits right on top of the SBA lending database, another is public transactions and private, and as well as private lower middle-market transactions. And too, our databases that people like myself contribute to when we sell a business. We put the information in there so that we can see what and how businesses are being traded in different industries. And a lot of times we can see, you know, who the buyers are in different industries and what they're paying.

So it's a lot of...we pull comparables first, but then we also look at discounted cash flow methods and market methods and then look at specific industries in specific markets. So it's a little bit of art and it's a little bit of science, but it is very fact-based. And then some businesses, you really can't...we don't put a price on because we don't know what a strategic buyer can bring to the table and what it can mean for them. And that's usually a lower middle-market business, but for a main street business, there's lots of good information out there that we can find to be able to value a company.

Steve: We're talking to Doreen Morgan, she's head of the Atlanta Sunbelt Business Brokers. Doreen, isn't it difficult when a client thinks their business is worth a lot more than you valued it at?

Doreen: Yeah, those are difficult conversations to have. And that's, you know, one of the very first things that we do before we bring a client on is we do an opinion value on the company. So we really dive into their financials and put together an opinion of value on the business. Because, you know, we don't want to bring a client on that's got false expectations, and, you know, a client that we ultimately won't be able to help if the business is overpriced. And then in those cases, you know, we're usually able to give them some guidance on what they might be able to do to improve the valuation. And then, you know, we revisit it in six months or a year or sometimes three years. But businesses are worth what they're worth. And sometimes sellers do have higher expectations, and sometimes they're really pleasantly surprised.

Steve: Oh, yeah, I guess I could see that too.

Doreen: Yeah, yeah. Then those are good, those are great conversations to have. I think, you know, we really do a good job of educating a seller on how value's arrived and what their businesses are worth. And, you know, if it's not going to get them the money that they need to reach their retirement or whatever their next goal in life is, you know, we work with them until they do actually realize the value that they want.

Steve: Well, you know, I want to kind of go back, I was telling about a friend of mine that sold their business. Took him about a year, but I forgot, I want to also say that he said it was the best investment he ever made by having somebody to do this for him. Because there's so much involved when you go to sell your...or buy a business that you should have professionals. And I really want to emphasize that, that you need someone like a Sunbelt Business Broker. Doreen, we're going to go to break. Give everybody your phone number.

Doreen: Our phone number is 770-936-9099.

Steve: And what is your website address?

Doreen: It's sunbeltatlanta.com

Steve: Great. We're gonna go to break. When we come back, we're gonna... Oh, I've got so many questions about buying and selling a business. We're here with Doreen Morgan, and she is with Sunbelt Business Brokers. We'll be right back.

Announcer 2: At Sunbelt Atlanta, their team is made up of seasoned professionals with more than seven years of collective experience selling companies. Their backgrounds and industry experience are as varied as the companies they represent. Some come from main street, some from Wall Street. Now, collectively, Sunbelt Atlanta Business Brokers have closed hundreds of transactions and the companies they have sold range in size from $100,000 to $50 million in revenue and spanned all industries.

Doreen Morgan owns Sunbelt Atlanta and she is one of the leading merger and acquisition advisors in the United States, specializing in franchise and specialty distribution business models. For more than 15 years, Doreen has advised franchisors, multi-unit franchisees, and owners of proprietary and patented products on short and long-term portfolio exit strategies and corporate divestitures. Sunbelt has helped hundreds of business owners in Georgia get the most value from the sale of their business. Sunbelt Atlanta Business Brokers are a full-service company when it comes time to sell or buy a business with zero upfront fees. So discover the Sunbelt Atlanta difference and contact them today at 770-936-9099. Once again, that's 770-936-9099. Or you can visit them on the web at sunbeltatlanta.com.

We are back with "Ask the Experts" and your host Steve with today's expert. Now, back to Steve Sanger.

Steve: Hey, if you're tuning in for the first time, this is the "Ask the Experts" show. We're on every Wednesday morning during your drive time, 9 to 10. And we have with us, and she will be back with us again next month too, Doreen Morgan. She's head of the Sunbelt Business Broker Atlanta. And if you are thinking about selling your business, or if you're in the market to buy a business, give Doreen a call. Give her a call tomorrow. I'm sure your... Are your offices open Friday?

Doreen: Yeah, they are. Yep.

Steve: Okay. Great. Gosh, you see, you never know anymore. Gosh, I'm here still having people still on their Christmas vacation. And here we are past Christmas. I just got a text from a listener wanting to know how you feel about buying a restaurant with the pandemic and everything going on.

Doreen: Okay. Well, restaurants are...you know, they're in a state of flux right now, for sure. Some are making more money, and are more profitable, better margins. And others are struggling. And it kind of depends on the concept and whether they were able to pivot through the pandemic. Owning a restaurant is great for people that are in the restaurant business, like the restaurant business. It is a hard industry. You have to have a love for it, for sure.

Steve: A lot of hours.

Doreen: Yeah, yeah. But, you know, it's a fun industry. People enjoy it, it's profitable. And right now, to buy a restaurant in this market coming out of the pandemic and not really sure what's going on, restaurants that are profitable are selling well. And restaurants that have been able to pivot through the pandemic are doing well. I would say, you know, for an owner of a restaurant right now, the biggest challenge is the costs and the supply chain issues. And being able to navigate that will certainly help with the sale of your business. You know, I think I've talked to a lot of restaurant owners who have been really hesitant about raising prices, you know, at least as recent as three months ago, and, you know, food prices are what they are right now and it doesn't look like they're going to come down anytime soon.

So if you're a restaurant owner hesitant about raising your prices, customers understand that. We've seen restaurant owners raise the prices and they haven't had a lot of customers drop off, cover counts are what they were. Customers understand that, you know, when bacon used to sell for $60 a case and it's now selling for $169 means that restaurant owners need to raise their price. And that's just what's going on in the market. But in order for restaurant owners to survive, that is what they're going to need to do. And for people buying a restaurant, you know, they need to look at that and that's good question for a buyer to ask because, you know, when was the last time you took a price increase? And what does supply chain look like? And I think for the most part, a lot of the supply chain's issues have worked themselves out.

So I would say, if you, you know, want to buy a restaurant, I wouldn't let the pandemic deter you from that. Because, you know, I think that most people feel like we're coming into the end of that. And if we're not, restaurants are reopening, customers want to see restaurants reopen, they want to get back out there. So I wouldn't let what's going on right now deter you from buying a restaurant. And if you're selling a restaurant, it is a good time to sell if you've been able to maintain profitability through the pandemic, that's especially attractive right now. And it's a good time to sell because there are so many buyers on the market. And even if you haven't maintained profitability through the pandemic, if you've started to rebound, that's not going to deter people either.

Steve: Doreen, when someone comes to you that wants to buy a business, do they already know the industry they want to go into? Or do they leave that up to you? Or what are hot businesses to buy?

Doreen: A lot of times, people have an idea of what they're looking for. Sometimes they don't. And I would really suggest, you know, really sit down and think about if you want to buy a business, what do you like to do? What are you good at doing? And what kind of transferable skills do you have? To be successful, it's always going to be more important to do something you really like than buying a business that needs, you know, cash requirements. Sometimes we talk to buyers that just say, "I need to replace an income of 150,000 a year." And so they're looking at the cash flow of the business before they're actually looking at the day-to-day operation of the business. And, you know, we usually really try and steer people away from that. Because if you're buying a business, there really is no such thing as an absentee-run business. You're going to have to be hands-on. Even if you've got layers of management in it, if you're buying a main street business, you're going to be hands-on at some level.

And so it should be a business that you really like, something you enjoy doing, and/or something that you're good at. We really encourage buyers to think about what they really like to do. And with the buyer activity level so high right now, the best thing to do is get on the distribution list. Every brokerage firm has a buyer distribution list. Make sure you're on that buyer distribution list, because you're going to see companies that are taken to market go out to that distribution list before they're posted anywhere else. So you want to be on distribution list at brokerage firms. And, you know, it can be a task, but it's well worth it to pick up the phone and call, you know, all the brokerage firms in your area or in the area that you want to move to, make sure you're on their distribution list.

And I would say, you know, not necessarily even call, but sometimes you can join online. But you do want to...the more you can articulate what it is you're looking for, the better response you'll have from the brokerage firm, you'll be added to the correct list, you'll be put in touch with, you know, the industry expert in that space, you know, if you're looking for an auto repair shop, for example. The more specific you can be the better. And it's good to have an understanding of what size business you can afford to buy. You know, most businesses that are sold through a business brokerage firm will qualify for SBA financing, at least most of the time. And in those cases, you know, SBA requires the buyer to have between 10% and 20% down. So that should give you kind of an idea, you know, of what size business you can afford to buy.

Steve: Well, you have your own list, too, you have a top 10 list of things to do that they can get from you. How would...?

Doreen: Yeah, yeah, we do. And if you're interested in getting that top 10 list, you can email jmentor@sunbeltatlanta.com.

Steve: Or they can call your office. Right?

Doreen: Right. 770-936-9099.

Steve: And I guess before we leave, if you can give me 30 seconds on why someone should hire your company, whether they're buying or selling a business?

Doreen: Well, we represent sell side. So if you're selling a business, you know, we represent you from start to end. We don't charge any upfront fees at all. You want to know what your business is worth, you know, certainly reach out to us. We can do an opinion of value on your company, let's see where you are. Whether you want to sell now or in three years, it's always a great thing to do is have an understanding of what your company is worth so that when you are ready to sell, you have an understanding of what it will sell for. And if it's not valuing out where you need it today, you can spend some time working on that.

When we take a company to market, it's completely confidential. No one knows that it's your business for sale until after buyers have signed a nondisclosure agreement saying they won't tell anybody that your company is for sale. They provide financial statements and resumes. So we know they're qualified to see your business before we release any information on your company to them. And then we manage the entire due diligence process from there. We package your company and financials and send it out for review through preferred SBA lenders. So that, you know, when we do find the buyer, we've got a bank that's lined up and ready to do the loan. And then we facilitate the entire closing process and that process with Sunbelt typically takes between five and seven months.

Steve: Well, I gotta tell you, I could have gone easily another 30 minutes' worth of questions with you. But we'll get to those. And I know I already had someone text us wanting us to talk about franchises. So I'm sure we'll get to that next time. You'll be with us again next month. Give everybody your phone number again.

Doreen: 770-936-9099.

Steve: The name of the company is Sunbelt Business Brokers Atlanta. And we're going to go to break now. When we come back, we're going to be doing our insurance adjuster show. Doreen, thank you so much and have a Happy New Year.

Doreen: Yeah, thank you, Steven, you too. Happy New Year.

Steve: We'll talk to you next month. Thank you.

Doreen: Okay, thanks.

Steve: We're gonna go to break, we'll be right back.

Announcer 2: At Sunbelt Atlanta, their team is made up of seasoned professionals with more than 70 years of collective experience selling companies. Their backgrounds and industry experience are as varied as the companies they represent. Some come from main street, some from Wall Street. Now, collectively, Sunbelt Atlanta Business Brokers have closed hundreds of transactions and the companies they have sold range in size from $100,000 to $50 million in revenue and spanned all industries.

Doreen Morgan owns Sunbelt Atlanta and she is one of the leading merger and acquisition advisors in the United States, specializing in franchise and specialty distribution business models. For more than 15 years, Doreen has advised franchisors, multi-unit franchisees, and owners of proprietary and patented products on short and long-term portfolio exit strategies and corporate divestitures. Sunbelt has helped hundreds of business owners in Georgia get the most value from the sale of their business. Sunbelt Atlanta Business Brokers are a full-service company when it comes time to sell or buy a business with zero upfront fees. So discover the Sunbelt Atlanta difference and contact them today at 770-936-9099. Once again, that's 770-936-9099. Or you can visit them on the web at sunbeltatlanta.com.